A Review of the Nigerian Energy Industry

Financial market update

26 April 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Nigerian inflation accelerated to 12.1 percent in March as food prices increased, adding to expectations the central bank will keep interest rates at a record.

The inflation rate in Africa’s top oil producer climbed from 11.9 percent in February. The central bank raised its policy rate by 6 percentage points to a record 12 percent since 2010 to curb price pressures. Governor Lamido Sanusi said yesterday March inflation data was in line with the bank’s estimate, with the bank still expecting a peak of 14.5 percent in the third quarter and a gradual slowdown to below 10 percent by the end of 2013.

EUROPE: A gauge of European bank shares climbed, with Swedbank AB jumping to its highest price in almost a month. Electrolux AB, the world’s second-biggest appliance maker, rallied 6.5 percent. Temenos Group AG (TEMN) soared 19 percent as the Swiss banking-software maker’s first-quarter sales beat estimates and it confirmed its full-year outlook.

CHINA: Cnooc Ltd. sold $2 billion of bonds denominated in U.S. dollars in its first offering in more than a year.

China’s biggest offshore oil and gas explorer issued $1.5 billion of 3.875 percent, 10-year notes and $500 million of 5 percent, 30-year bonds, both at a relative yield of 190 basis points more than similar-maturity Treasuries.

Bonds – The auction cut-off rate was lower than market expectation, we however expect a light bullish run today to fill excess demand at the auction though no aggressive run is anticipated due to higher inflation rate.

Bills – The auction cut-off came out lower late yesterday as a surprise to the market, the significant drop recorded on the 1yr tbill is related to a last minute surge in demand based on expectations of a drop in inflation rate yet to be announced at auction time, a volatile session is expected today based on different views as to reading of the inflation details and expectations of OMO auction today in the market.

Money Market – OBB and O/N maintained at 14.00% and 14.50% respectively, cash market remains illiquid with expected outflows today and Friday to fund tbill, bond and FX auction.

FX
                           Hi              Low          Close        Prev.Close
USD/NGN  157.20/30  157.87/97   157.10/20    157.15/25

NIBOR (%) LIBOR (%)

 

O/N

 

14.7083

 

USD 1 month

 

0.2388

 

7 Day

 

15.0000

 

USD 2 month

 

0.3468

 

30 Day

 

15.5417

 

USD 3 month

 

0.4659

 

60 Day

 

15.9167

 

USD 4 month

 

0.5651

 

90 Day

 

16.2917

 

USD 6 month

 

0.7294

 

USD 12 month

 

1.0472

 

Y/Y Consumer Inflation March 2012 :

 

12.10%

 

FX Reserves: 24 April 2012 (USD bn)

 

36.396

 

MPR

 

12.00%

 

Source: FMD and CBN

 

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